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BNP Bounces Back With Strong Profit in 3rd Quarter

By David Jolly October 31, 2014 3:57 amOctober 31, 2014 3:57 am

PARIS — BNP Paribas, the largest French bank, posted a strong third-quarter net profit on Friday, bouncing back after suffering a huge setback in the previous period from its fines in the United States.

The bank, based in Paris, posted net income for the period from July to September of 1.5 billion euros, or $1.9 billion, up 10.6 percent from a year earlier, on revenue of €9.5 billion, up 3.9 percent. The profit was roughly in line with market expectations.

Jean-Laurent Bonnafé, the chief executive, said in a statement that the bank’s results were “a very good overall performance, thanks to its diversified business and geographic mix,” with revenue growth across all of its businesses and cost reductions.

The performance was led by the investment banking unit’s 24 percent gain in pretax income, to €675 million, and the asset management business’s 7.6 percent gain in pretax income, to €538 million.

In Paris morning trading, shares of BNP Paribas rose 2.1 percent, giving it a market value of about €60 billion.

Jon Peace, a banking analyst with Nomura International in London, said the bottom line was better than many in the market had expected. Signs of weakness in BNP Paribas were “a little disappointing,” he said, but over all, “the current quarter shows the benefits of the diversity of BNP’s operations.”

The latest results are a sharp turnaround from the previous quarter, when BNP Paribas took a charge of nearly €6 billion for penalties in the United States, leading to a second-quarter loss of €4.3 billion.

The bank pleaded guilty in June to illegally conducting dollar operations on behalf of countries blacklisted by the United States, including Iran and Sudan, and paid almost $9 billion in fines to regulators in New York and Washington. It announced on Sept. 27 that its chairman, Baudouin Prot, was stepping down.

The bank trumpeted its capital base, the funds that serve to buffer an institution from financial shocks, describing its balance sheet as “rock solid,” with a common equity Tier 1 ratio of 10.1 percent.

European banks are required to have a minimum of 4 percent common equity Tier 1 capital under European rules, but larger banks are required to maintain a higher minimum capital level, which is set by their local regulators.